The UK's creative industries are thriving in the UK and yesterday's budget had some great news for them. Driven by the adoption of digital technologies, the creative industries are the country's fastest growing business sector and globally have achieved a level of influence disproportionate to the UK's size. British designers; writers; producers; performers and creators are recognised as being world-class, as evidenced by the quality of our television, the success of our musicians, the influence of our fashion industry and the tally of our Oscar winners.
But while creativity is thriving in the UK, many businesses struggle to make the step from executing successful projects to becoming fully-fledged, sustainable creative businesses. Investing and lending to many creative businesses is still a minority activity, but that may change as a result of some of the measures George Osborne introduced.
Many great creative businesses start off as a tiny project, a whim, a shot in the dark. The Seed Enterprise Investment Scheme (SEIS) has been crucial in supporting investment in start-ups and SMEs that do not have evidence of positive cash flows or significant assets. The scheme is ideally suited for encouraging more risk capital into these early stage ideas, so the Chancellor's decision to make its status permanent is excellent news and should attract new investors into what is effectively R&D for many early stage creative businesses.
The project nature of creative enterprises means that many of them have to seek out new alternative finance sources such as crowd-funding; peer-to-peer lending; venture debt and pension-led funding. The recently announced requirement for banks to signpost rejected applications to alternative sources of funding is therefore another welcome stride in the right direction and an indication that the government is taking seriously the needs of businesses whose asset base is ideas - intellectual property - rather than physical stock or property.
The Floow, is an example of a business that Creative England has been helping who were unable to access traditional forms of financial support. They are an independent UK digital company poised to transform the motor insurance industry with their smart phone technology. Based in Sheffield, this young company was given a business loan by Creative England, having been turned down by many others who simply did not understand their proposition. The loan enabled them to create eight new jobs, double their turnover to £500,000 and charge towards a £2million turnover for the next financial year. The forecast is that they will create 70 new jobs in Sheffield and become a global telematics exporter.
The raise on the rate of the R&D tax credit for small businesses and doubling of the Annual Investment Allowance will in turn encourage more investment into growing and scaling early stage ideas such as those developed by The Floow into proper business propositions.
And, the government's announcement on the doubling of direct lending to UK businesses for exports and a cut in the interest rates on that lending should also be welcomed. Games companies, for example, operate in a global market; in fact research by Nesta shows that 91 per cent of UK video games developers export their products overseas, so this is a significant measure for this growing group of businesses.
Furthermore 86% of games companies are based outside the capital; the low costs of entry to market for many creative and digital enterprises means they simply don't need a London address to thrive. This has to be a good win for the country as a whole.
George Osborne said that this Budget was for the makers, doers and savers in the country. He announced measures to support our manufacturing industry that is back on track and growing after a tough period. I say let's also look to the future makers - the makers of ideas, of intellectual property. Let's continue to give creative businesses the tools to grow, no matter where they are based in the country, and watch them become the driving force of our economy.
The key announcements in today's Budget for creative businesses:
• The Seed Enterprise Investment Scheme (SEIS) to help finance start-ups made permanent
• The Annual Investment Allowance (AIA) has been doubled to £500,000 and extended until the end of 2015, which means 99.8 percent of businesses will pay no tax on investment
• Business rates discounts and enhanced capital allowances have been extended for enterprise zones for another three years
• Lending for exporters doubled to £3billion and interest rates on that lending cut by a third
• Extension on the grant for small businesses to support 100,000 more apprenticeships
• Raise on the rate of the R&D tax credit for loss-making small businesses from 11% to 14.5%
• An extension of the film tax credit